SHRI SAIBABA CHARITABLE TRUST,THANE vs. INCOME TAX OFFICER EXEMPTIONS WARD, THANE

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ITA 1462/MUM/2026Status: DisposedITAT Mumbai17 July 2026AY 2020-20216 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeals, acknowledging reasonable cause. It held that the Assessing Officer should have computed the income under commercial principles after allowing expenses, rather than taxing the entire gross receipts.

What were the facts?

The assessee, a charitable trust, filed appeals with a delay of 72 days. The delay was attributed to a lack of awareness regarding tax procedures and reliance on previous consultants. The Assessing Officer denied exemption under Section 11 due to the absence of registration under Section 12A.

What were the issues?

Whether the delay in filing the appeal should be condoned and how the income should be computed when exemption under Section 11 is denied due to lack of Section 12A registration.

Which sections of the Income-tax Act were involved?

Section 11,Section 12A,Section 270A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI

Before: SHRI CHALLA NAGENDRA PRASAD & SHRI MAKARAND VASANT MAHADEOKAR

Pronounced: 17/07/2026

PER SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER: These two appeals are filed by the assessee against different orders of the learned Commissioner of Income Tax (Appeals), [“Ld. CIT(A)”], in denying exemption u/s 11 of the Act and sustaining the disallowances made by the Assessing Officer while completing the assessment and levying penalty u/s 270A of the Act.

2.

These two appeals are filed with a delay of 72 days and the assessee filed a petition for condonation of delay along with the affidavit explaining the delay. The contents of the affidavit are as under:

“I Naresh Pawar (PAN AGHPP6020G), aged 54 years, do hereby state under solemn affirmation as under: 1) That I am the Managing Trustee of Sai Baba Charitable Trust ("the Trust"), PAN: AAMTS2821H, since 2012. The trust runs a school and a junior college under the name Shri R N Vidhyalaya & Junior College at Diva, Dist Thane, Maharashtra and provides education mainly to the weaker sections/ families from nearby villages. The students are mainly from small farmers, fishermen and daily wage earners families. 2) That since I and my co-trustees are not aware about the nitty gritty of the Income Tax Law, they had appointed one Mr. Bapu Chawdhry, Income Tax Consultant for income tax compliance related matters since incorporation of the trust and M/s Padmakar Wadyekar & Co, Chartered Accountants for audit of the trust and they were responsible for undertaking all compliances relating to the Income-tax Act, 1961 such as, preparing and filing audit reports, income tax returns, registration application, etc. 3) That I was aware that litigation was on-going with the Income Tax Department due to rejection of registration application u/s 12A. 4) That as and when received I was forwarding such notices or letters to my tax consultant and Chartered Accountants, Mr. Bapu Chawdhry and M/s Padmakar Wadyekar & Co., respectively. 5) That a letter dated January 12, 2025, was served on our trust for the Assessment year 2020-21, requesting us to pay demand of Rs. 83.48 lacs. Soon after sharing the same with my consultants, I also shared the same with my friend- Shri Subhash Vichare from Ratnagiri who also runs a school under a charitable trust like ours, just to understand if he too had been facing any such litigation with the Income Tax Department. 6) That on discussion with my friend Mr. Subhash Vichare I learnt that they had faced certain litigation with Income Tax Department recently and with the help of his CA friend Mr. Vinayak Padwal, based at Mumbai, they had preferred appeals before the Income- tax Appellate Tribunal in Pune and the tax demands were subsequently deleted. 7) That on learning the same, I immediately requested for the contact details of Mr. Vinayak Padwal from Mr. Subhash Vichare and contacted him immediately. 8) That on communication with Mr. Vinayak Padwal, he introduced us to another Chartered Accountant - Mr. Darshit Naik based at Surat, Gujarat and informed me that he would be able to help me out with the Income Tax matters. 9) That thereafter, I immediately requested Mr. Darshit Naik to help us out and shared with him login credentials of our Income Tax Portal. 10) That on perusal of the details on the Income Tax Portal, he explained to us that many matters for the assessment years 2019- 20 to 2022-23, were pending and in certain cases appeals were not filed against orders passed against our trust. That on learning the same, I was astonished and informed him that I was unaware of the procedures of Income Tax Law but I was always informing my tax consultant and Chartered Accountant if any notice or letter was served upon us and despite the same, they did not inform us of the further steps to be taken. 11) That we were always under the bonafide belief that all tax matters are being handled and taken care of by our existing tax consultants and Chartered Accountants. However, due to lack of proper advice and guidance by them, the next steps could not be taken in a timely manner. 12) That we were always under the Bonafide belief that all tax matters are being handled and taken care of by our existing Chartered Accountants. However, due to lack of proper advice and guidance by them, the next steps could not be taken in a timely manner. 13) That inter alia, for A.Y. 2020-21, Mr. Darshit Naik informed us that against the order of the Commissioner of Income-tax (Appeals), National Faceless Appeals Centre, dated 22/09/2025, disallowances aggregating to Rs. 1.76 crores had been upheld and an appeal was required to be filed before the Income-tax Appellate Tribunal within a period of 60 days from the date of receipt of the said order, however, he guided me that an appeal can be filed belatedly with a request for condonation of delay. 14) That upon learning the same, I immediately requested him on behalf of our trust to assist us in preparing and filing the appeal before the Income Tax Appellate Tribunal.

15) That this affidavit is being sworn with a view to bring on record the above facts regarding the unintentional delay of approximately 72 days in filing the appeal before the Income tax Appellate Tribunal. 16) That I humbly state that the delay in filing the appeal is neither willful, nor deliberate and that a decision on the merits of the matter will completely meet the ends of justice. The above facts are true to the best of my knowledge and belief and that the contents of this affidavit have been explained to me in the vernacular language known to me.” 3. Considering the contents of the affidavit, we are of the view that the assessee was prevented with reasonable cause in filing these appeals. Thus, the delay of 72 days in filing of these appeals is condoned.

4.

Coming to the merit of the additions, Ld. Counsel for the assessee, at the outset, submitted that the Assessing Officer while completing the assessment denied exemption under Section 11 to the assessee and brought to tax entire gross receipts of the assessee and further no expenditure was allowed in the absence of registration u/s 12A of the Act. Ld. Counsel submitted that in the absence of registration u/s 12A of the Act, only course left was to assessee the income under commercial principles after allowing the expenditure. Ld. Counsel submitted that the appeal be restored to the file of the Assessing Officer with a direction to compute the income under commercial principles after allowing expenditure under commercial principles and not to tax the entire gross receipts for the assessment year under consideration.

5.

The D.R. fairly agreed to the submissions of the learned counsel.

6.

Heard, both the sides and perused the orders of the authorities below. We find merit in the submissions of the Ld. Counsel for the assessee. The AO having denied exemption u/s 11 in the absence of registration u/s 12A he should have computed the income under commercial principles by allowing the expenses and for not taxing the entire receipts of the assessee. Thus, we restore this appeal to the file of the Assessing Officer with a direction to compute the income under normal provisions of the Act on commercial principles after allowing the expenses in accordance with law after providing adequate opportunity of being heard to the assessee.

7.

Since, we have restored the quantum appeal to the file of the AO, the penalty appeal also is restored to the file of the AO.

8.

In the result, both the appeals of the assessee are allowed for statistical purposes.

Order pronounced in the open court on 17/07/2026 Sd/- Sd/- MAKARAND VASANT MAHADEOKAR CHALLA NAGENDRA PRASAD ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 17/07/2026 Kunal Copy to: Shri Saibaba Charitable Trust, 801, Chinmay Heights, Diva Agasan Road, Diva East, Diwa, Thane -400612, 1 Maharashtra

Income-tax Officer, Exemptions, Thane 208, 2nd floor, REAC, Thane-400602, Maharashtra 2

3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE

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